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Hybrid Rice: Boon or Bust? @RISK Helps Settle The Debate

When you dig into pork fried rice or a Chipotle burrito, you’re probably not thinking about what variety of rice your chowing down on. There’s a good chance that rice is a hybrid—a strain that’s been carefully bred by scientists to give higher crop yields. And, if it was grown in the U.S., it was likely grown in Arkansas, where roughly 45% of domestic rice is grown. While you’d never guess it from the burrito, there’s been a debate as to whether hybrids are nothing but hype.

A recent case study describes how a group of Arkansas rice farmers banded together to form a mass tort against RiceTec, the company that owns all of the commercially available hybrid rice strains. These higher-yielding, disease-resistant strains come with a higher price—around $150 per acre rather than $22 per acre “There’s sticker shock there,” says Dr. L. Lanier Nalley, an associate professor of Agricultural Economics and Agribusiness at the University of Arkansas. “For the average farmer in Arkansas with a thousand acres, that’s a lot of up-front money.”

These rice farmers claimed that these pricier varieties of rice were faulty and milled poorly. According to the farmers, this combination of higher costs to them along with (in their view) lower quality meant the group could not earn profits on the hybrid rice which were equivalent to conventional (inbred) varieties.

Nalley wanted to examine the validity of this claim, comparing the economic risk and return of RiceTec’s hybrid rice varieties to conventional, non-hybrid rice. Using @RISK’s Monte Carlo simulation features and risk analysis services, Nalley was able to show that RiceTec’s hybrids were not only more profitable, but also less risky than their conventional counterparts—specifically, thanks to the enormously higher overall crop yield, even with a $1 per 100 lbs docking fee from mills, the hybrids still gave an overall higher profit.

Nalley says @RISK was key in coming to this conclusion. “The simplicity of this software meant that I could literally do these calculations in five minutes,” he says.